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People power hits
property taxes

There is a silent revolution brewing in Hawaii. Twenty-six years after it rose up in California as Proposition 13, a property-tax protest is spreading in Hawaii.

Last month Kauai voters approved a county charter amendment to limit annual increases in real property tax charges to 2 percent.

On the Big Island last month, the county council called for limiting property tax increases to 3 percent for homeowners who promise to dedicate their property as "owner-occupied" for five years.

And on Maui, a citizen's group wants to limit increases for owner-occupied residential property. Under this plan, homeowners would pay no more than 4 percent more per year than they paid in 2001.

Ann Kobayashi, the former state Senate Ways and Means chairwoman who now runs the Honolulu City Council budget committee, is tracking the new ideas and is intrigued.

"It is very interesting. Say we limit the property tax to what you paid in 1980 with maybe an annual increase of 2 percent," Kobayashi muses.

She reasons that for many, nothing has happened to their homes except the value has soared. The houses haven't been improved, nothing changed in the neighborhood to make them more or less attractive, but because of demand, housing prices are jumping and so are property-tax valuations.

Neighbor islanders have cause to worry about their property taxes. The median price for a Big Island home is $329,00. It is $580,000 on Kauai and $607,500 on Maui.

Lowell Kalapa, president of the Hawaii Tax Foundation, argued in a recent column that this new interest in tax relief will be a bad thing.

"The problem is not only that the burden will be shifted to new homeowners, but it will also be shifted to businesses that will have no choice but to pass the cost of the increased burden on to their customers, old-timers and newcomers alike," Kalapa warns.

Another group, labor, is also worried about the pending property-tax revolt.

The Hawaii Fire Fighters Association lobbied hard against the Kauai proposal and is now urging the council and county administration to fight it in court.

Saying the Kauai tax roll-back will "have grave consequences," the firefighters warn that the county would lose $3 million and there could be layoffs and cuts in public services such as fire and police protection.

Even the Kauai Chamber of Commerce came out against the tax-cut plan.

"Public policy should not be developed at the ballot box," the chamber warned.

Business and labor critics, however, have yet to offer alternatives to homeowners who have seen property taxes rise with no increase in services.